Establish your presence globally with Neeyamo as we help you go beyond borders to manage your international payroll and hire new talent in Ecuador.
Overview
In 2008, Ecuador claimed the rights to be the first country that gave rights to nature. The country believes in the ideology that "Nature has the right to exist, persist, maintain and regenerate its vital cycles, structures, functions and its processes in evolution." Chapter 7 of Ecuador's constitution highlights the guidelines for running the economy without harming the environment or minimizing the carbon footprint left behind.
Does your organization plan to hire employees in an environmentally conscious country? Do you lack a physical entity in the country – a key requisite to hiring local talent? Neeyamo assists organizations worldwide with onboarding and managing employees in Ecuador -processing payroll and tax services, managing local compliance requirements, benefits, and more.
Facts And Stats
Capital
Quito
Currency
United States Dollar (USD)
Official Language
Spanish
Fiscal Year
1 January - 31 December
Date Format
DD/MM/YYYY
Country Calling Code
+593
Time Zone
ECT (Ecuador Standard Time) GMT -5
Global Payroll
Overview
Handling payroll for a widespread workforce can pose a significant challenge for any organization, and the added complication of compliance can make things worse. If companies spend more time processing payroll, it directly impacts day-to-day operations and their overall productivity.
Over the years, Neeyamo has observed these complexities and strived to provide a global payroll solution through a single technology platform - Neeyamo Payroll.
Neeyamo's Payroll 3.0 has set in motion the era of single-touch payroll, which simplifies and accelerates the pace of the payroll process. Neeyamos payroll software provides the perfect solution for all your global payroll needs – for employees working in primary geographies, the long-tail region, remote or internationally located.
Payroll Taxes
Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the general population's welfare. These are statutory in nature and are levied from both the employer and employee. Additional statutory contributions are made by employers towards aiding both short-term and long-term benefits for their employees.
Employee Taxes
The employee taxes in Ecuador is computed as follows:
| Social Security | 9.45% |
| Total Employee Cost | 9.45% |
The income tax bracket is as follows:
| Upto $11,722 | 0% |
| $11,722 - $14,930 | 5% |
| $14,930 - $19,385 | 10% |
| $19,385 - $25,638 | 12% |
| $25,638 - $33,738 | 15% |
| $33,738 - $44,721 | 20% |
| $44,721 - $59,537 | 25% |
| $59,537 - $79,388 | 30% |
| $79,388 - $105,580 | 35% |
| $105,580 and above | 37% |
Employer Taxes
The employer taxes in Ecuador are computed as follows:
Social Security - 12.15%
Reserve Fund (after one year) - 8.33%
Total Employment Cost - 12.15%
Payroll Cycle
Overview
Undoubtedly, payroll is a critical process for any organization. Pay cycle in Ecuador refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.
Frequency
Payments are made monthly, and there may be a fortnightly advance in some companies (which is voluntary) discounted in the monthly payment.
13th Month Cycle
The thirteenth salary is paid monthly or in a single payment in December. The fourteenth salary is paid monthly or in a single payment in August (Sierra region) and in March (Costa region).
Global Work
Overview
An Employer of Record services (EOR) provider helps you eliminate the hassle of handling complexities while onboarding a new employee in an international location. They help bridge the gap that otherwise mandates organizations to have a locally registered entity and a local bank account before making a job offer to an international hire.
An Employer of Record services (EOR) provider acts as a legal employer, facilitates salary payments, and manages other statutory requirements such as health insurance, payroll taxes, and employee benefits, ensuring compliance with local tax laws and regulations.
This allows organizations to focus on collaborating with the employee in Argentina for operational tasks, with the knowledge that they have a cost-effective solution to support their global business payroll & HR requirements as they continue their global expansion.
HR Mandates and Practices
Minimum Wage
For the year 2024, the minimum monthly wage is USD 460 for all employees.
Overtime
Regular overtime hours are paid at 150% of the regular pay. If employees work during Saturdays, Sundays, or holidays, they are paid at a rate of 200% of the regular pay. Regular overtime hours are paid at 150% of the regular pay. If employees work during Saturdays, Sundays, or holidays, they are paid at a rate of 200% of the regular pay. Night surcharge is paid if the working day includes hours between 7:00 p.m. and 6:00 a.m.
Hiring and Onboarding Requirements
Hiring
When hiring employees in Ecuador, using an employment contract is advised. While it can be oral or written, it is best to have a strong, written agreement in Spanish. It should include essential employment terms, such as termination requirements, statutory benefits, compensation, etc. All compensation and salary amounts should be in USD. An employer can choose from several employment contracts to hire Ecuador employees depending on their employment.
Onboarding
The common practice is to go through the client's employment contract, discuss the office culture, give them a code of conduct, and outline the expectations. If required, training is given to ensure the employee performs better.
Probation
The probationary period in Ecuador depends on the role type and is stipulated within the employment agreement. In general, probation periods are up to three months.
Leave
National Holidays
There are 14 public holidays.
- Jan 1: New Year
- Feb 20: Carnival
- Apr 7: Good Friday
- May 1: Labor Day
- May 26: Battle of Pichincha day
- Aug 10: Independence Day
- Aug 11: First Cry of Independence
- Oct 9: Guayaquil Indepependence Day
- Nov 2: All Souls day
- Nov 3: Cuenca Independence Day
- Dec 25: Christmas Day
Sick Leave
Individuals who have contributed to the Ecuadorian Social Security Institute (IESS) for 180 consecutive days within the six months preceding the onset of their illness, or 189 consecutive days within the eight months preceding the onset of their illness, are eligible for sick leave.
Employees who meet the requirements for coverage will have their first three days of sick leave paid for by their employer, and the remaining days will be covered by the Ecuadorian Social Security Institute (IESS).
Maternity Leave
Pregnant employees are eligible for a 12-week (84-day) paid maternity leave. This leave is broken down as follows: two weeks before the expected due date and ten weeks after the child's birth. In the event of multiple births, the leave is extended by an additional ten days, for a total of 94 days.
Paternity Leave
The father is entitled to 10 days of paid leave if the child is born by normal delivery, 15 for cesarean or multiple births, and 18 for babies born prematurely or requiring special care. If the child is born with a degenerative, terminal, or irreversible disease or with a degree of severe disability, the father will be entitled to 25 days of paid leave.
Other Leave
Bereavement leave: Employees who have suffered the loss of an immediate family member are entitled to up to 3 days of paid bereavement leave.
Childcare leave: Employees are entitled to 25 days of leave should their child be hospitalized.
Adoption leave: Employers must grant adoptive parents 15 days paid leave of absence from when the child is legally delivered to them.
Military leave: When an employee is called to partake in Compulsory Military Service in the National Armed Forces, the employee is entitled to paid absence. The employer is required to pay the salary in the following proportion:
- During the first month of absence from work - 100%
- During the second month of absence from work - 50%
- During the third month of absence from work - 25%
Termination
Notice Period
The notice period is not a statutory obligation but is stipulated in the employment contract.
Severance Pay
Ecuadorian Labor Code dictates the severance pay if it is applicable. It is equivalent to a one-month salary payment for each year of service, pro-rated for any part-year worked, with minimum financial compensation of three months and a maximum of 25.
Visa
Overview
The Ecuador Temporary Resident Visa is intended for individuals who wish to stay in the country for an extended period, such as to live, work, study, or retire. It can be valid for up to two years and renewed before expiration.
Different types of temporary resident visas include:
- Ecuador Work Visa for those employed by a company in Ecuador
- Ecuador Student Visa for those accepted into a university or academic program
- Ecuador Retirement Visa for retirees with sufficient financial means.
Employee Background Checks
Legal and Background Checks
Employers perform background verification depending on the employment requirement.
Last updated on January 11, 2024.
If you have any queries or suggestions, reach out to us at irene.jones@neeyamo.com
